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Supreme dourt of tJ|E Hnttcii States

COUNTY OF IMPERIAL, CALIFORNIA, )ET AL., )

)PETITIONERS, )

)V. ) No. 79-1003

)GUILLERMO GALLEGO MUNOZ, ET AL., )

)RESPONDENTS. )

)

Washington, D.C. October 15, 1980

Pages 1 thru 40

☆ ^ ☆ A ☆ ☆

'fr rVTY/cT) & ☆ LMn^nl ☆NORTH AMERICAN =REPORTING =

GENERAL REPORTING. TECHNICAL, MEDICAL LEGAL. DEPOSITIONS. GENERAL TRANSCRIBING

Washington, D.C. (202)347-0693

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IN THE SUPREME COURT OF THE UNITED STATES

COUNTY OF IMPERIAL, CALIFORNIA, ET AL.,

Petitioners,

v.

GUILLERMO GALLEGO MUNOZ, ET AL.,

Respondents

No. 79-1003

Washington, D. C.

Wednesday, October 15, 1980

The above-entitled matter came on for oral argument

at 1:31 o'clock p.m.

BEFORE:

HON. WARREN E. BURGER, Chief Justice of the United StatesHON. WILLIAM J. BRENNAN, JR., Associate JusticeHON. POTTER STEWART, Associate JusticeHON. BYRON R. WHITE, Associate JusticeHON. THURGOOD MARSHALL, Associate JusticeHON. HARRY A. BLACKMUN, Associate JusticeHON. LEWIS F. POWELL, JR., Associate JusticeHON. WILLIAM H. REHNQUIST, Associate JusticeHON. JOHN PAUL STEVENS, Associate Justice

APPEARANCES:

JAMES H. HARMON, ESQ., County Counsel, County of Imperial, County Courthouse, 939 West Main Street,El Centro, California 92243; on behalf of the Petitioners.

WILLIAM H. KRONBERGER, JR., ESQ., 1007 Fifth Avenue,Suite 1100, San Diego, California 92101; on behalf of the Respondents.

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CONTENTS

ORAL ARGUMENT OF PAGE

JAMES H. HARMON, ESQ.,on behalf of the Petitioners. 3

WILLIAM H. KRONBERGER, JR., ESQ.,on behalf of the Respondents. 17

JAMES H. HARMON, ESQ.,on behalf of the Petitioners -- Rebuttal. 39

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PROCEEDINGS

MR. CHIEF JUSTICE BURGER: We'll hear arguments next

in County of Imperial, California, v. Munoz.

Mr. Harmon, I think you may proceed when you are

ready.

MR. HARMON: Thank you.

ORAL ARGUMENT OF JAMES H. HARMON

ON BEHALF OF THE PETITIONERS

MR. HARMON: Mr. Chief Justice, and may it please the

the Court:

The issue in this case is whether it is permissible,

consistent with principles of res judicata and the Anti-

Injunction Act, for the federal court to enjoin enforcement

of a ground water exportation restriction in Mr. McDougal's

use permit when the California Supreme Court earlier ruled

the restriction enforceable.

If I may, before going to the facts of the case,

I would like to briefly address the geographical setting for

this case.

In this Court's recent opinion in Bryant v. Yellen,

the Court described the Imperial Valley as an area located

south of the Salton Sea in southeastern California. It lies

below sea level and is an arid desert in its natural state.

That case, the 160-acre limitation case, dealt with lands in

Imperial County which are within the irrigation district

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boundaries and are irrigated. Mr. McDougal's parcel, however,

lies on the West Mesa of Imperial County, an area totally

dependent on ground water supplies.

Going to the facts of the case, the California

Supreme Court found Mr. McDougal estopped from challenging,

and thereby bound by the export restriction in his use permit

based on facts which showed that his predecessor, with counsel,

agreed to the imposition of the export restriction, abided by

it, and benefited from the limited permit as issued. Further,

Mr. McDougal when he purchased the property was aware of the

restriction. When Mr. McDougal went to the County officials

and demanded removal of the export restriction, he was informed

that he should make application for a new conditional use per­

mit. Instead of applying for a use permit, Mr. McDougal

simply defied the County authorities, entered the subject

brokerage contract with respondent Munoz and immediately as

many as 44 tank trucks carrying 250,000 gallons a day began

export of water to Mexicali, Mexico.

One of the major allegations of the respondent's

complaint is that enforcement of the subject export restriction

will cause economic hardship to them by requiring them to go

eight miles farther north in the County, to the so-called

Clifford well, to buy water for export. It is alleged that

the price of water is higher at the Clifford well, also in

the County eight miles north.

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QUESTION: How far away is Mexicali from this well?

MR. HARMON: Approximately, I would say, six miles,

Your Honor. The well site --

QUESTION: So it would be more than twice as far to

the other well?

MR. HARMON: The well is on Highway 98, which kind

of parallels the Border, and the Ocotillo well is eight miles

north on Highway 98.

I believe that the res judicata issue is the major

issue in the case. The 9th Circuit Court of Appeals, of

course, rejected the County's argument on res judicata by con­

cluding that the McDougal decision is not a final judgment on

the merits as to the respondents' cause of action. That's

fundamentally incorrect.

QUESTION: Well, it was an estoppel judgment though,

wasn't it?

MR. HARMON: Yes, it was an estopped judgment, and

I've indicated what the facts were substantiated in that

estoppel.

QUESTION: And your res judicata argument is that

not Mr. McDougal should continue to be bound by that judgment

but his vendees --

MR. HARMON: Exactly.

QUESTION: — should also be bound by that estoppel

j udgment.

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MR. HARMON: Exactly. And Justice White, I will

get to the privity question in a moment, if I may. But im­

portantly --

QUESTION: Well, you have to, I suppose.

MR. HARMON: Yes, indeed. Importantly, recognize

that the 9th Circuit did not even reach the privity issue.

It simply concluded that this is not a final judgment on the

merits as to the respondents' action. That can't be true, it

seems to me.

QUESTION: You could say it was true, but still

the estoppel judgment shouldn't stand against these people.

MR. HARMON: I will get to that. Importantly, the

issue of the enforceability of the export restriction was the

central issue in the McDougal case. After five years of

litigation, finally the California Supreme Court ruled it

was enforceable. Indeed, the decision is based on --

QUESTION: Yes, it affirmed the injunction.

MR. HARMON: Affirmed that portion of the injunction.

Now, on the issue of what is a final judgment on the merits,

for purposes of res judicata, Professor Moore indicates that

a test is where there is a measure of identity so that the

different judgment in a second action would destroy or imperil

rights or interest established by the first judgment. Here,

Your Honors, the injunction issued by the District Court

robs the California Supreme Court's decision of all of its

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vitality and meaning. In one case we've got the California

Supreme Court concluding that the export restriction is

enforceable, now the District Court is telling the County

officials that the export restriction must be enjoined. It

seems to me that it's clear that the focal point made by

the 9th Circuit is erroneous and requires reversal.

Now, going to the issue of privity, may I again

remind the Court that the 9th Circuit did not address, did

not even reach the issue of privity. The last page of the

Circuit Court of Appeals decision there is a statement that

indicates that assuming that the respondents are in privity,

they would not be bound because of the prior conclusion on the

cause of action issue. The record, however, establishes

relationships between McDougal and the respondents which I be­

lieve make it clear they should be regarded as being in privity

with McDougal.

First of all, there is the contractual relationship

between respondent Munoz and McDougal. Munoz has been an

integral part of the McDougal operation since its inception.

A verified complaint in the federal action indicates that

Munoz is the broker for sale of water to bottling companies in

Mexicali.

QUESTION: Well, don't many courts disagree with

the 9th Circuit's rather limited definition of res judicata

as limited to issues that have been litigated on their merits

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and say that it's any issue that was litigated or might have

been litigated?

MR. HARMON: I think that's correct. Certainly in

the reading I've done, the thrust of many writers' opinions

is that you're to look at the substance, not just the form of

the situation, and if there has been a meaningful relationship

between the parties and those who would also be bound by the

preclusionary rule, where they've had the opportunity to

intervene and litigate the case, they should likewise be

bound.

QUESTION: Well, Mr. Harmon, didn't -- weren't

those other issues, though, presented in the state litigation?

It's just that the state court didn't decide ^hem. They

were presented and tendered, and the state court decided the

case on estoppel.

MR. HARMON: That's correct.

QUESTION: But isn't estoppel itself a substantive

ground?

MR. HARMON: Yes, it is. The leading case there is

Enterprise Irrigation.

QUESTION: And the Court of Appeals for the 9th

Circuit said it wasn't. So -- but that certainly is a fair

issue.

MR. HARMON: The cases clearly establish that

estoppel is an independent and adequate ground for --

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QUESTION: Well, I guess McDermott, I suppose, at

least, or McDougal, or whatever his name is.

MR. HARMON: I'm further suggesting that the respon­

dents are in privity with McDougal. I've alluded to the con­

tractual relationship.- Furthermore, if I can draw the Court's

attention to page 16a of the Appendix, specifically paragraph

4 of the complaint, the last phrase of that paragraph. I'm re­

ferring to roman numeral iv on page 16a. The last phrase reads,

"all other plaintiffs" -- i.e., Martinez and de Leon -- "herein

are third party beneficiaries of the contract between Guillermo

Gallego Munoz and the defendant Donald Courtney McDougal, Sr."

So I think that there are interwoven interests here

which are established in the record and for purposes of privity

those relationships should suffice, with other things.

Now, additionally, these respondents actually had

the opportunity to intervene in the state court litigation

and/or participate, and in fact, respondent Munoz did partici­

pate in the state court proceedings and he argued as an amicus

curiae before the California Supreme Court.

QUESTION: Could you have named him a party to your

lawsuit?

MR. HARMON: I think the County might have, but the

problem with that, Your Honor, is conceivably there are hun­

dreds of people who might have been named parties; namely --

QUESTION: But you think -- that bind all of

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McDougal's customers on the privity theory.

MR. HARMON: On the facts of this case, yes.

Now, the other major issue, I think, that bears on the privity

issue is the fact that we're talking about the same piece of

property and the identical rights. The respondents have not

applied for a conditional use permit themselves. They are

instead simply trying to challenge the export restriction in

Mr. McDougal's permit.

In reading Professor Vestal's law review article

in the Iowa Law Review, cited in my brief, he talks about

still another ground for binding non-parties, which is, I sup­

pose, separate and apart from res judicata and that involves a

situation where these third parties' rights are derivative of

the party to the lawsuit. Here rights to sell water commer­

cially from the well depend on the issuance of a permit to

McDougal. Respondents' rights to purchase from McDougal for

export are necessarily derivative of McDougal's, it seems to

me.

QUESTION: Mr. Harmon, would you make the same

argument if some new , person in Mexico who formed a water

brokerage business', was not involved previously as a

constomer of this well, came in and Said,' I'd like

to attack the zoning ordinance. Could you defeat

his claim? - '

MR. HARMON: There is not a zoning ordinance here in

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effect.

QUESTION: I understand.

MR. HARMON: Vis-a-vis use permit, I think that --

yes, Your Honor, I think that the underlying --

QUESTION: So you really don't rely at all on the

prior relationship between the Mexican broker and the property

owner?

MR. HARMON: I rely extensively on the contractual

relationship between McDougal and his broker, Munoz.

QUESTION: But you said the same argument would

apply to someone who had no prior contractual relationship?

MR. HARMON: I think so. Going to the Anti-Injunc­

tion Act --

QUESTION: You say it isn't a -- just to make it

clear -- this isn't a zoning ordinance, this is a restriction

on the sale of water, as the Supreme Court said?

MR. HARMON: This is a land use 'permit. That is,

we're talking about --

QUESTION: But it's a restriction on the sale of

water?

MR. HARMON: Right. But it applies -- what I was

going to say is, it applies to a single parcel of property.

There is no county-wide ordinance which restricts the applica­

tion of water or any other product, for that matter. That's

indicated, it seems to me, by the pleadings which indicate the

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respondents can go eight miles north and purchase water from a

well there.

QUESTION: Would it .make any difference to your case

if there were a county-wide restriction?

MR. HARMON: If there were a county-wide restriction

which the respondents were individually affected by, I would cer

tainly believe under that set of circumstances they could have

standing to challenge the restriction. One of the cases cited

by the Court of Appeals and the District Court is Hale v. Bimcc

for the proposition that third party strangers are not barred

by reason of a state court adjudication from subsequently chal­

lenging in the federal courts a statute that's arguably uncon­

stitutional. If the County had an ordinance which had county­

wide application preventing export, an adjudication against

McDougal, I don't think, would bind third party strangers

separately and individually affected by that ordinance.

Here, though, this permit rose with a particular

parcel of'land, the McDougal parcel. I think that under all

of the circumstances taken into consideration, the California

litigation has got to once and for all under the theory under­

lying res judicata adjudicate the rights that flow from that

piece of property. Were the County to purport to enact an

ordinance which says, no, there will be simply no export,

then I would think any number of individuals might achieve

standing to challenge it.

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The Anti-Injunction Act, of course, prohibits the

federal court from granting an injunction or staying .to

stay proceedings in a state court except where expressly

authorized by Congress or when necessary to aid in its juris­

diction. The Court of Appeals indicated that the Anti-Injunc­

tion Act did not have application because there were no pro­

ceedings pending, and further it, relying on Hale v. Bimco,

indicated that if there were proceedings pending, qothing

would prevent a third party stranger from challenging a stat­

ute. Your Honors, I think that the California Supreme Court

injunction contemplates ongoing jurisdiction in the court and

inherent authority in the court to enforce the injunction.

As subsequently ; -there has: actually

been a contempt proceeding, a contempt judgment, by the trial

court judge against McDougal for having willfully violated the

terms of the trial court injunction as affirmed by the

California Supreme Court. I therefore think that the prelimi­

nary injunction issued by the District Court likewise violates

the spirit of the Anti-Injunction Act.

I think this Court's recent decision in Vendo is

analogous. That case along-with others -- Hill v. Martin --

make it clear that the Anti-Injunction Act's prohibition is

broad and to be strictly construed, and that it applies to any

stage of a state court's proceeding, from the time of final

judgment through enforcement.

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QUESTION: Was McDougal held in contempt?

HR. HARMON: Yes, he was held in contempt.

QUESTION: But then the judgment was stayed, wasn't

it?

MR. HARMON: The execution of the judgment was

stayed, Your Honor.

QUESTION: And depending on how the Court of Appeals

came out, it was stayed permanently?

MR. HARMON: That's correct; execution was.

QUESTION: Well, now, so what does that mean about

the injunction?

MR. HARMON: Well, it certainly doesn't indicate to

me that the state courts have deferred making a determination,

as for example was the case in Hale v. Bimco, where the

Florida State Supreme Court before ever getting to final

judgment said --

QUESTION: Well, what, if the state court was at

least saying as to McDougal, this injunction doesn't mean any­

thing; he can violate it if he wants to.

MR. HARMON: The state court was aware, I think,

Your Honor, that cross-contempt proceedings were also going on

in the Federal District Court, and --

QUESTION: Well, I know, but they stayed it pending

the outcome of this case.

MR. HARMON: Stayed execution of the contempt judgment

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against McDougal.

QUESTION: And if McDougal won this -- or if Munoz

won this case and McDougal was off the hook, then McDougal was

off the hook. Right?

MR. HARMON: I think that's correct.

QUESTION: So what does the injunction mean?

MR. HARMON: The injunction or the --

QUESTION: Against McDougal.

MR. HARMON: The injunction against McDougal is

clearly a final judgment, by the California Supreme Court.

QUESTION: Well, but it's been rendered -- it cer­

tainly isn't the creature that it was, if McDougal can violate

it at will.

MR. HARMON: Well, I think the final judgment of the

California Supreme Court has been all but emasculated by the

preliminary injunction issued by the Superior Court. -- Excuse

me; the District- Court.

QUESTION: The Superior Court is the one who issued

the injunction in the beginning.

MR. HARMON: That's right. And its judgment has

been affirmed by the California Supreme Court --

QUESTION: Well, that doesn't keep the Superior Court

from setting it aside.

MR. HARMON: The Superior Court, Your Honor, has

shown no intention to set aside its judgment; to the contrary.

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QUESTION: Except; insofar as it tells McDougal he

doesn't need to obey it.

MR. HARMON: Except insofar as it has withheld exe­

cution of the contempt judgment against McDougal until a final

determination by the United States Supreme Court.

Finally, the Court of Appeals directed that the 9th

Circuit should determine the "export question" in accordance

with Hughes v. Oklahoma. We contend that there is no export

question before the Court and that the judgment of the California

Supreme Court, based as it was on estoppel, furnished an independent,

adequate, state court basis for the judgment. But assuming

arguendo that there is some standing in the respondents, we

wish to point out that Hughes v. Oklahoma should not have appli­

cation because, first of all, Hughes v. Oklahoma involved a

direct appeal challenging an Oklahoma statute to this Court.

There were neither res judicata nor anti-injunction action

issues in that case.

Finally, we have cited the Hudson County Water

Company case wherein Justice Holmes upheld a New Jersey

statute which did prevent diversion of a stream from outside

the state and we think that that might be analogous here. If

the Court were to ever get to the actual issue and the merits

of the export restriction, we think that Hudson v. Hudson

County Water presents an independent ground for sustaining an

export restriction situation.

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QUESTION: The merits are not really before this

Court in this posture of the case, are they?

MR. HARMON: I believe not. Your Honors, I would

like to reserve some time for rebuttal.

MR. CHIEF JUSTICE BURGER: Mr. Kronberger.

ORAL ARGUMENT OF WILLIAM H. KRONBERGER, JR.

ON BEHALF OF THE RESPONDENTS

MR. KRONBERGER: Mr. Chief Justice, and may it please

the Court:

I think that we have to keep a couple of things in

mind at the very outset of this case. The respondents are

three citizens of the Republic of Mexico who have gone into a

Federal District Court with a straightforward question to that

Federal District Court. The Federal District Court -- there's

an export ban that says that after McDougal has acquired water,

pumped it from the ground, stored it in his storage tanks,

McDougal cannot sell that water to me, a Mexican citizen, be­

cause in granting a conditional use permit for no reasons re­

lating to land use, intensity of use or anything, the County

of Imperial has simply decided to ban the export of that water

from that particular parcel.

QUESTION: Would there be any question of the stand­

ing of these plaintiffs to bring a suit, quite apart from the

question of res judicata?

MR.KRONBERGER: I don't believe so. I believe you

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might be hinting at the question as to whether or not a for­

eigner, non-citizen of the United States might bring an

action --

QUESTION: Are these just three of probably thousands

if not millions of potential buyers?

MR. KRONBERGER: Well, I would suggest that in our

allegations we have pointed out that these particular plain­

tiffs are lawfully within the United States, and once you are

lawfully within the United States, it seems to me that the

Constitution talks in terms of persons are protected, and it

doesn’t say, citizens of this country, and it seems to me

that a person --

QUESTION: Well, we're talking about the Commerce

Clause of the Constitution.

MR. KRONBERGER: That's correct, and I believe that

a person lawfully in this country exercising the right as a

purchaser ought to be able to invoke the basic fabric of this

nation, the Commerce Clause, in a Federal District Court.

QUESTION: ‘ Well, Mr. Kronberger, what if your clients

had litigated the precise same issue that you say they are

now seeking to litigate here in the Federal District Court up

through the California state court system, saying that this

violates the Federal Constitution, the Supreme Court of Cali­

fornia had ruled against them, certiorari denied here. Would

you say that they would have the right to start all over again

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in the district court?

MR. KRONBERGER: I think that that question is

answered by the principles of res judicata, and if res judicata

would apply because they were in those proceedings, then I

would agree with your statement. However, I am somewhat con­

cerned that, for example, I believe in one opinion of this

Court -- I believe it was Huffman v. Pursue, Ltd., there was

some language to the effect that a litigant in a state court

might come back in a federal court and challenge, but that was

a very limited statement in that decision --

QUESTION: But you weren't in the state --

MR. KRONBERGER: -- and I don't believe that I would

press that point here..

QUESTION: You weren't in the state -proceedings?

MR. KRONBERGER: No, we weren't; that was my next

comment. My clients -- and this is something, I wish I could

start over in this case. Instead of labeling it "Guillermo

Gallego Munoz" as the first party, I would have put Juan de

Leon in because Juan de Leon wasn't even in business when

these state court proceedings were going forward, and my point

is, my clients, these respondents have never had a day in a

court, be it a state court or a federal court. They've raised

an issue; at some point it has to be answered. And turning --

QUESTION: Mr. Kronberger, could I return for a

moment to Justice Stewart's question? Supposing instead of a

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.total restriction on export, there had been a restriction on,

say, you can only pump for four hours a day, something that's

on a -- less clearly directed at a person in your

capacity, would a vendee have standing to come in before the

County and challenge that kind of restriction on the ground

that if he produced more water, maybe I could buy more?

MR. KRONBERGER: No, I don't think so because I sub­

scribe to the view that there is a legitimate police power in

local and state government to" regulate land use. Now, I

think that what makes this case so unique is the direct,

explicit holding of the California Supreme Court that this

particular restriction is not land use or --

QUESTION: No, my question didn't go to the merits,

it goes to standing, whether a customer of the property owner

would have standing to say, I want to complain about this be­

cause it affects my business? It 's’ the standing question that

I think we're seeking to answer.

MR. KRONBERGER: I would think that if that customer

were raising it under the Commerce Clause, I believe he would

have standing, and I would just revert to my position: that

is, if you are in this country lawfully discharging a busi­

ness, you have a right to invoke the protections afforded in ,

the Constitution to raise it.

QUESTION: Well, could anybody who lives in Mexico

be a potential plaintiff in this suit?

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MR. KRONBERGER: I think you're going to have to

show some interest --

QUESTION: Or anybody who lives in Canada?

MR. KRONBERGER: I think you'd have to show some

interest in the outcome of the litigation. This Court has

held --

QUESTION: The interest would be I want to buy water,

or I may want to buy water sometime.

MR. KRONBERGER: Well, I think, arguably, yes.

Let's put it in another light. What if I am driving from

California to Texas and I have an old-type automobile with a

radiator and I want to stop in at the McDougal well and fill

up my radiator; McDougal says, no. You're taking the water

outside of-the County. It seems to me --

QUESTION: And then could you be a plaintiff in the

federal court?

MR. KRONBERGER: It seems to me that I would have

the right to bring that, because I have been directly harmed

by a regulation of a governmental entity that has said --

QUESTION: Well, then, anybody who alleges that he

now wants to or may in the future want to buy water is a po­

tential plaintiff in the federal court, is that it?

MR. KRONBERGER: Well, I don't know that I would

read it that far.

QUESTION: That is, anybody who does not live in the

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United States?

MR. KRONBERGER: I think that somebody who can show

a relationship --

QUESTION: Or does not live in the Imperial Valley,

rather, in this county?

MR. KRONBERGER: Correct. I would say that someone

who can allege and show that they have an interest in raising

the issue can raise it. I don't think you could come into the

federal court and say, well, I might want to purchase water

sometime.

QUESTION: That's his interest. He wouldn't be in

the federal court if he weren't interested.

MR. KRONBERGER: That's correct.

QUESTION: Well, doesn't that open the door to

Mr. McDougal to just find somebody, kind of a straw man to

go into Federal District Court and relitigate what he's already

lost in the Supreme Court of California?

MR. KRONBERGER: I don't think the issue was lost

in the Supreme Court of the State of California. I think the

Supreme Court of the State of California specifically refused

to rule on the issue. And I think that if we are going to

assert that McDougal went out and found straw men arid somehow

manufactured a lawsuit, that that is an element of proof in

the trial. And I have to point out, we're here on a prelimi­

nary injunction. There is nothing in this record to show

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any connection between these plaintiffs and McDougal save

three isolated acts.

QUESTION: What about 16a. that was read to us

before, paragraph iv? You say there's no connection. But

they do say there is a connection*.

MR. KRONBERGER: I point out to you that that is in

the second cause of action wherein Munoz is seeking specific

performance of his agreement with McDougal, and in that sense -■

QUESTION: Is that a true statement?

MR. KRONBERGER: That is a true statement. For pur­

poses of res judicata, though, I don't think that we can say,

because I am going to be the buyer I have automatically been

foreclosed because the seller has somehow been foreclosed in a

state proceeding which did not reach the issue. I think we

open a dangerous door if we tell government, local government,

that it may grant and deny land use permits or any kind of

permits for reasons wholly unrelated to the local purpose

land use, and if a seller is somehow estopped to raise or

challenge that issue, that the whole world is barred from ever

challenging it. I would suspect that that would open doors to

novel methods of discrimination against international commerce,

state commerce, and a host of other things that I think are

protected activities. If I might --

QUESTION: Well, the Commerce Clause doesn't by its

terms protect any activities, it just gives the Congress of the

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United States the power to regulate commerce among the several

states or international commerce or commerce with the Indian

tribes, period.

MR. KRONBERGER: That's correct.

QUESTION: It doesn't say anything about persons or

protections or anything else.

MR. KRONBERGER: And in its self-executing form,

the way restrictions imposed by state and local governments

are raised, they are raised by those who are harmed, and that

recognizes, I think, that a state has a right to regulate in

an area that may impact interstate and foreign commerce. As

this Court pointed out in Hughes v. Oklahoma, if you're going

to regulate in that area, then you'd better do it in a manner

that is not discriminatory or overly burdensome on interstate

and foreign commerce. Here we've got a flat, outright --

QUESTION: In Hughes v. Oklahoma, it was a person

who wanted to take the minnows out of the State who was the

plaintiff, wasn't it?

MR. KRONBERGER: That's correct.

QUESTION: So, in other words, he was in the shoes

of McDougal in this case?

MR. KRONBERGER: No, he would be in the shoes of

perhaps Munoz.

QUESTION: No, no, he wasn't the purchaser. He was

a person who wanted to take the minnows out of the State,

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wasn’t he? Wasn't that Hughes?

MR. KRONBERGER: Correct. What about Altus, Oklahoma

Carr? It was the purchaser there who wanted to take the water

out of Texas. And I think that decision stands for the propo­

sition that the State of Texas could not enforce an export ban

and the residents of Altus, Oklahoma, brought that suit.

I. think in reviewing this decision, it is very-

important to keep in mind that these parties in this case

have not had their day in court. They have not had an oppor­

tunity to participate in the state proceedings. One of them

didn't even exist in the business. And it seems to me that

in order to have res judicata in this case we have to have

two things: one, a final judgment on the merits which, when

the California Supreme Court says it's not going to decide the

issue, in my view does not constitute a decision on the merits.

And the next thing we've got to have is some relationship

between the parties and the party that appeared in the Cali­

fornia court in order to hold him and bind them as privies.

Now, privy is kind of a shorthand method of saying

simply that we think there's enough connection between these

people that they ought to be bound by the judgment.

v.

QUESTION: Well, Mr. Kronberger, let me. get

back to your definition of res judicata. Supposing in the

California state court litigation Mr. McDougal thought of the

Commerce Clause argument but his lawyer told him that this

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just is too much of a long shot to raise. We won't bother

with it right now. And the thing went all the way to the state

Supreme Court and many issues were decided but that one wasn't.

And then there was a petition for rehearing and the Supreme

Court of California said, no, you're too late. Would you say

that issue is not res judicata?

MR. KRONBERGER: It would be as to McDougal, who

participated in that litigation. I think that with respect to

parties who were not party to the state litigation, we're

talking about collateral estoppel and we're talking about

issues that were actually decided, issues that we might use as

a sword or a shield against those non-parties and for purposes

of collateral estoppel it seems to me that the only items that

might be asserted for that purpose are issues that were actual­

ly decided. And I come back to the central issue that the

question presented to the Federal District Court, i.e. and to

wit, the ban on the export of water, has never been decided

by any court. At some point in time, I think it's fair to say

that third parties who have never been in a court proceedings

ought to have the right to have the question decided either

for them or against them, unless we can say that those parties

were so close to the proceedings in California that they ought

to be bound, and that somehow McDougal stood in their shoes.

I would point out, how could McDougal stand in the shoes of

the three Mexicans, when the very issue that they were

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concerned with was the one that he’s estopped to raise?

QUESTION: Are you going to argue the anti-injunction

issue ?

MR. KRONBERGER: Yes, sir, if I might.

QUESTION: Because I wonder why -- the federal court'

judgment did do away with the state court injunction. Isn't

that true? Didn't it?

MR. KRONBERGER: Not really. There were other

things that the County of Imperial could have done.

QUESTION: Well, didn't it -- yes, but, the injunc­

tion was lifted. It was rendered unenforceable by the judg­

ment .

MR. KRONBERGER: It was rendered unenforceable in

the sense that the County of Imperial was restrained from

enforcing the regulation. It seems to me that McDougal's

duties --

QUESTION: Why do you say that doesn't violate the

Anti-Injunction Act?

MR. KRONBERGER: Well, okay, I rest on Hale v.

Bimco, number one. I think the holding in Hale v. Bimco in

this Court is that third parties simply are not bound by

2283. This Court in Mitchum v. Foster said that the test to

determine the applicability of 2283 is to look back at the

law as it existed before Toucey v. New York. Mr. Justice

Frankfurter wrote Toucey v. New York and Hale v. Bimco, as

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well as footnoted Hale v. Bimco.

QUESTION: Well, they may not be bound, they may not

-- perhaps the injunction doesn't apply to them, but that

doesn't mean the injunction shouldn't continue to apply to

the person to whom it applies, namely, McDougal.

MR. KRONBERGER: Well, that's exactly what happened,

though, in Hale v. Bimco. Hale v. Bimco is on all fours with

this case. The State of Florida sued Hale and said, enforce

this interstate regulation. It went to the Florida Supreme

Court and the Florida Supreme Court after demur said, yes.,

that's constitutional. Bimco Trading Company, third parties,

come in, sue Hale, say, don't enforce that; I want an injunc­

tion barring you from enforcing it. The Federal District 'Court

issues it, the Florida courts stay proceedings as have the

courts in California, in deference to a final determination of

the federal issue. And in that decision the Court held, in

Hale v. Bimco, that third parties are not bound by the provi­

sions of the anti-injunction statute and proceeded to render

unconstitutional the particular regulation in question and said

that they found it very hard to do so after it had been decided

constitutional by the highest state court of Florida, but they

felt that they had to do it. I would say that --

QUESTION: It's at least clear that the result of

this federal judgment is that the state court injunction is

unenforceable against McDougal.

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MR. KRONBERGER: It's unenforceable to the extent

that McDougal has commenced selling of water, and I'm not sure

what the status of that injunction is anymore, after the some­

what delphic contempt order issued by the state courts.

QUESTION: Well, what exception to the Anti-Injunc­

tion Act do you think this falls.under?

MR. KRONBERGER: I've said, first, of all, the. anti­

injunction statute doesn't apply because of Hale v. Bimco and

the policies of federalism underlying that. Secondly, though,

if we are going to say that the anti-injunction statute applies

we have pled this case in the context of a civil rights pro­

ceeding. I believe that in that sense that Mitchum v. Foster

provides:the exception .there.

I think that to hold 2283 applicable in this case

we're going to have to seriously diminish the holding in Hale

v. Bimco, or overrule it. And I would submit that the princi­

ples of federalism that this Court has announced in a series

of cases don't warrant it in this particular fact. One of the

principles that we look at in the question of enjoining a state

court, when we say, you shouldn't, is we want to allow the

state courts to try the cases before them free from inter­

ference by federal courts. There is no proceeding pending in

a state court of California wherein this constitutional issue

is going to be interfered with by any Federal District Court.

The state courts have deferred to the federal courts with

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respect to the issue. They have not interfered, so that par­

ticular policy does not require 2283 to be applied in this

case.

QUESTION: But in Hale, didn't the Supreme Court of

Florida stay all further proceedings in the state courts pend­

ing determination by this Court?

MR. KRONBERGER: Yes, it did, and I think that

that's exactly what happened in this case. First of all, the

Superior Court, as I said, in a delphic order it said to

McDougal, McDougal, you're ordered to stop selling water 30

days after the 9th Circuit judgment against you becomes final,

and if the County loses in the 9th Circuit the thing is stayed

until resolution on appeal.

QUESTION: But the Supreme Court of California never

said that?

MR. KRONBERGER: It went to the Court of Appeals

because McDougal filed a writ of mandate when he was found in

contempt. It went up to the District Court of Appeals in

California and the District Court of Appeals has stayed any

proceedings with respect to the contempt against McDougal,

pending the outcome of this decision in this Court, so far as

even citing the case. And it seems to me that the two courts in

California have specifically deferred.

QUESTION: But not the highest court?

MR.KRONBERGER: Well, in order to get a deferrance

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from the highest court, the Court of Appeals would have had to

turn down McDougal's writ of mandamus and then he would have

gone to the state court. The Florida thing is a little dif­

ferent in Hale v. Bimco because you were dealing in a situa­

tion of original jurisdiction in Florida:. The original

action was brought in the Florida Supreme Court by virtue of

some statutes in Florida which allowed initial proceedings in

the Supreme Court there. We couldn't -- McDougal could not

get to the California Supreme Court, absent denial of relief

at the Court of Appeals level, and he was granted that relief.

It seems to me that the policy that we talk about is when

we're in doubt about issuing an injunction we're to resolve

that doubt in favor of allowing the state court proceedings to

proceed in an orderly manner to a final decision on the merits.

There are no state court proceedings proceeding any­

where with respect to getting us a decision on the merits of

the simple question provided by these three Mexican nationals:

is the export ban constitutional or not? It's not proceeding

in any court in the State of California. And I think that when

we look at 2283, it uses the word "pending proceedings."

And I think that those phrases have to have some meaning of

currency, something in the present tense that must be occurring

In this case there is no California court contending that the

regulation is constitutional or unconstitutional. It's not

before any California court. The only parties contending that

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the regulation is a constitutional exercise is the County of

Imperial. It seems to me that we have not violated any prin­

ciples of federalism when a third party comes in under this

Court's decision in Hale v. Bimco and there is no decision

or proceeding going forward in the state court, we simply have

not violated those principles of federalism on which 2283 rests,

QUESTION: Was there any proceeding pending in the

Florida courts? .

MR. KRONBERGER: I'm sorry, I didn't hear that.

QUESTION: Was there a proceeding pending in the

state courts in Hale?

MR. KRONBERGER: Yes, there was. In fact, in Hale --

well, pending in the sense that it was commenced and in Hale

the Florida Supreme Court stayed those proceedings, awaiting

result on the constitutional issues from this Court. So in

that sense I think it was pending. They had brought a suit in

Florida to specifically enforce the regulation in question.

QUESTION: But your argument here is there's not

even that much of a proceeding pending in the California

courts ?

MR. KRONBERGER: No California court is considering

the constitutionality of the ban in question. The California

Supreme Court has just simply said, we're not going to decide

it. And then they footnote us to Altus, Oklahoma, v. Carr,

which seems to say that the particular export ban is

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unconstitutional. They hint at it; they don't come out and

say it. I think we have a policy underlying 2283 of avoiding

duplication of legal proceedings when a single suit could

satisfy the interests of the parties and all the issues could

be resolved.

There is only one single suit in which the interests

of the parties can be resolved and the questions answered,

and that's the suit that is here today.

QUESTION: Well, res judicata avoids duplication of

legal proceedings too, does it not?

MR. KRONBERGER: I think I would agree with you on

that. As a matter of fact, the more I thought about the 2283

issue, the more I came to believe that when you're dealing with

third parties 2283 is not applicable and you're dealing with

principles of res judicata because the analysis that you would

go through in res judicata ought to answer most of the ques­

tions that deal with 2283. So that that would reinforce in my

view this Court's holding in Hale v. Bimco, that 2283 does not

apply to third parties.

Because when we have third parties, I think we're

talking about res judicata. I would agree with

that.

QUESTION: Did you say earlier, Mr. Kronberger, did

I understand you to say, . correctly, that you've cast your

lawsuit as a 1983 lawsuit?

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MR. KRONBERGER:, We couched our lawsuit in civil

rights terms indicating --

QUESTION: I see a reference here to 1981.

MR. KRONBERGER: I was getting to that. It says,

1981, there. I think the rule in the federal courts is notice

pleading, and I think that as we have spelled it out in that

cause of action it can be read as a civil rights cause of

action under 1983 --

QUESTION: Because you talked about the applicability

of the doctrine of Mitchum v. Foster.

MR. KRONBERGER: That's correct, and had I to do it

over again today, I.'would like to change the "1" to a "3" to

make that point more explicit. But you're correct; it says

"1" in the pleadings, but the pleadings are couched in the

terms, I think, of the Civil Rights Act and I do believe the

courts have held pleaders to specific numbers when dealing

with civil rights actions.

We have alleged that there is much more to this

than meets the eye. In that fact, I would just turn your

attention to page 90, 91 of the Appendix, so that we can see

what kind of local interests are involved. The minutes of the

hearing, when the particular export ban was placed on the

property, the attorney for the predecessor in interest,

Mr. Sands, he says, Mr. Sands --

QUESTION: You're talking about the footnote here?

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MR. KRONBERGER: Yes, 91a. Those are the minutes of

the proceedings before the Board of Supervisors and the Plan­

ning Commission.. "Mr. Sands questioned if he would be in

favor of a limited period of time as previously requested, up

to 12-31-68." That's to allow the continuation of sale of water

to Mexico, and a statement that it would not increase the

amount of water exported from the County of Imperial; it would

be the same amount of water. Response: "Chairman Kilgore

stated that in regard to a temporary period of .time five

minutes would be too much." Yes, we have alleged civil rights

allegations in this case, so that it is more than simple

interstate commerce. And if we are going to apply 2283, I

believe we're within an exception to that.

I think that, 2283, the final outcome of 2283 being

applied in this case is simply going to be to divest Federal

District courts of diversity jurisdiction in this circumstance.

You are going to be saying, go to the state courts.

QUESTION: Well, it isn't diversity jurisdiction.

If you really mean what you say, you're raising -- it's a

federal question case.

MR. KRONBERGER: It's a federal question case and

the ultimate result of 228 3's application would be to tell a

plaintiff such as the plaintiffs here, the respondents, to

bring these questions in a state court because --

QUESTION: Well, that's what —

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MR. KRONBERGER: 2283 would bar you from injunc­

tive relief.

QUESTION: That's what the Anti-Injunction Act does

in cases to which it applies, that—it says if you want to

get the injunction set aside, go raise your federal issues

in the state court.

QUESTION: Which issued the injunction.

QUESTION: And you could have done that, you know;

you still could.

MR. KRONBERGER: Well, we could go to a state court

but I think the parties --

QUESTION: To the, to the Superior Court and say --

QUESTION: The court that issued the injunction.

MR. KRONBERGER: Well, we would have had to have

brought a new lawsuit. The result of that would be 2283 does

not say, thou shalt continue your pending lawsuits. It

says, thou shalt leave federal court and just start a new

lawsuit.

QUESTION: What did the Superior Court, how did the

Superior Court rule on your claims originally?

MR. KRONBERGER: I have no claims -- we have never

been in the Superior Court.

QUESTION: Well, where did you start -- did you start

the case -- where did you start the case?

MR. KRONBERGER: I started this case in the Federal

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District Court.

QUESTION: No, no. Where did McDougal litigate?

MR. KRONBERGER: McDougal was hit with an injunctive

and declaratory relief by the County of Imperial from the

Superior Court.

QUESTION: But he defended on constitutional

grounds, didn't he?

MR. KRONBERGER: And the Superior Court said, no,

the export ban is not with respect to interstate and foreign

commerce.

QUESTION: So the viewscofUthe State' Superior Court

are well known?

MR. KRONBERGER: Yes, the State Superior --

QUESTION: So, if you went to the state court, you

know what the judgment would be in the Superior Court, but

then you may not be bound in the State Supreme Court?

MR. KRONBERGER: That's correct but I would just

for the record say, my clients don't want to be in the state

court. They have a right to access to the federal court and

for a variety of reasons choose not to be in the state court.

Following the line of what happened, McDougal was first told

that the restriction was land use oriented and did not burden

interstate commerce. It got to the Court of Appeals and this

California Court of Appeals said, it's patently unconstitu­

tional, it burdens interstate commerce, and they declared the

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entire conditional use permit void. And McDougal was left with

nothing. McDougal appealed to the California Supreme Court,

which sidestepped the issue of what happens in California with

respect to a conditional use permit which has an unconstitu­

tional condition attached to it, it sidestepped it by saying,

you're estopped. And that makes, I think, a good deal of sense

because there are thousands of restrictions on conditional

use permits in the State of California, very few of which

probably rise to the dignity of a constitutional challenge,

and I don't think California courts wanted to open their courts

to those kinds of challenges.

QUESTION: Did McDougal petition for certiorari to

this Court?

MR. KRONBERGER: Yes, he did and this Court deter­

mined that the estoppel was an independent state grounds upon

which the judgment might rest. Yes, he did.

I would like to just, briefly at the end, say that

the federal policies that would be thwarted by application of

2283 -- and I think the implicit overruling of Hale v. Bimco,

will be to tell plaintiffs that 2283 may be used as a forum

shopping tool by the respondent or defendant. All they need

do is raise 2283 to a third party and that third party who

has never been in a state court -- he's told, gee, you should

have started your lawsuit in a state court when we had a fed­

eral question with diversity jurisdiction.

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In conclusion, I would suggest that to apply 2283

to third party non-litigants would elevate the provisions of

that section against the basic fundamental notion and concept

that parties ought to be given their day in the court of their

choice and with respect to federal questions they ought to be

able to bring federal questions to a federal court to litigate

it. I don't think that Congress ever intended that parties

who were not participating in state court proceedings should

ever be denied injunctive relief in a federal court when it is

properly brought before that court. Thank you.

MR. CHIEF JUSTICE BURGER: Do you have anything fur­

ther, Mr. Harmon?

MR. HARMON: Briefly, Mr. Chief Justice.

ORAL ARGUMENT OF JAMES H. HARMON

ON BEHALF OF THE PETITIONERS -- REBUTTAL

MR. HARMON: I do wish to dispute counsel's assertion

that he has pled a 1983 action. I've reviewed thfe pleading ,

carefully. I only find one reference to the Civil Rights Act,

and that starts at page 19. That cause of action is the cause

of action pled against McDougal, as I read it, for breach of

contract. There is no reference whatsoever to 1983 as a possi­

ble exception to the Anti-Injunction Act.

Furthermore, at page 121 of the Appendix the Court

may notice that a notice of reliance on a broader claim was

filed by the respondents here. I guess that's kind of an

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amendmemt to the pleading. Neither was 1983 mentioned in that

notice of reliance on a broader claim.

QUESTION: That's a "1." Had they at any time tried

to change the "1" to a "3" --

MR. HARMON: No, sir.

QUESTION: -- until just now?

MR. HARMON: No, Your Honor, they have not.

MR. CHIEF JUSTICE BURGER: Thank you, gentlemen.

The case is submitted.

(Whereupon, at 2:22 o'clock p.m., the case in the

above-entitled matter was submitted.)

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CERTIFICATE

North American Reporting hereby certifies that the

attached pages represent an accurate transcript of electronic

sound recording of the oral argument before the Supreme Court

of the United States in the matter of:

No. 79-1003

County of Imperial, California, et al.,

v.

Guillermo Gallego Munoz, et al.

and that these pages constitute the original transcript of the

proceedings for the records of the Court.

BY: CtXi. —William J. Wilson